** Market rebound is favorable in the short term

Recent developments suggest that following the adjustments witnessed in November, China's ** prices have experienced a notable surge, leading to a market rebound. For now, the short-term outlook for the ** market looks promising.

First and foremost, after a month-long period of stabilization, ** prices have finally shown signs of a robust recovery. According to industry data, domestic markets began their upward trajectory in mid-November. This month, the average price of domestic enterprises hovered around 433 yuan/ton, climbing to approximately 570 yuan/ton by month-end. Over just seven days, this represents a 31.54% increase, with the current price reflecting a 22.14% year-over-year rise.

"The low price base of ** provides significant momentum for upward movement," noted Zhou Yu, an analyst from a prominent social chlorine industry firm. "Previously, due to transportation restrictions and low operational rates among downstream companies, ** prices remained at a relatively low level, typically ranging from RMB 200/ton to RMB 250/ton. However, as the operational efficiency of downstream sectors improved and demand for ** products surged, coupled with reduced production loads for major chlor-alkali enterprises in Shandong, the price naturally trended upwards."

Currently, regional price variations exist across China. In Shandong Province, a major chlor-alkali production hub, prices are quoted between 600 yuan/ton to 650 yuan/ton—over 100% higher than the earlier levels.

Second, while the price upside appears promising, there are limitations. Zhongyu Information Analyst An Kang explained that the downstream market for ** primarily consists of PVC, ethylene, calcium carbide, propylene oxide, and methane chloride. These producers are generally energy-intensive and highly polluting enterprises. As energy-saving measures wind down and markets heat up, operational rates among these enterprises have improved.

"Although downstream operational rates have increased, they won't immediately reach full capacity. Demand remains moderate, making further price increases challenging," added Kang. "Moreover, the basic cost of ** products exceeds 1,000 yuan/ton, pushing many companies into losses. Given that chlorine is largely a byproduct in the chlor-alkali market, large enterprises often sell chlorine at a loss to ensure profitability from other products. Consequently, we anticipate the near-to-mid-term market will consolidate within a narrow range, with limited upside potential."

Third, in the short term, domestic listed companies involved in ** production stand to benefit. Some larger firms may leverage this momentum for promotional purposes. Xiang Han Securities Investment Advisor Zhang Hanshi remarked that while the current market is undergoing systematic risk adjustments, isolated pieces of good news haven’t yet significantly influenced broader market sentiment. Individual stock performances remain subdued. However, as stability returns, chemical stocks tied to ** production could attract investor interest. Investors should consider keeping an eye on companies like Lubei Chemical, Chlor-Alkali Chemicals, Nanhua Chemicals, Shenyang Chemicals, and Binhua Chemical Co., Ltd., as they may offer opportunities for active engagement.